Federal Communication Commission (FCC) Chairman Tom Wheeler wants cable companies to drop their resistance to net neutrality and increase competition with each other. Speaking at the National Cable & Telecommunications Association’s (NCTA) Internet and Television Expo, Wheeler also expresses the belief that the concentration of promoting competition between providers will be better for consumers and the industry as a whole.
“You have pledged as an industry to assure the Internet remains open and free,” said Wheeler. “In that goal, we are in violent agreement. We differ, however, on just what that means.” Bringing up the recent Title II classification of Internet providers and the subsequent lawsuits to stop it from proceeding, Wheeler advises that the Internet Conduct Standard is the “going forward rule.”
“The purpose of the Open Internet Order is not to create an obstacle course to test the ingenuity of ISPs in how they may structure certain activities. It is, rather, to address broad outcomes, not just the bright line rules of blocking, throttling, and paid prioritization.” The General Conduct Standard is said to address “effects that are antithetical to the concept of openness – namely, to not unreasonably interfere with or disadvantage access to the public Internet,” with Title II meant to provide the same support for interconnection agreements.
Wheeler also acknowledges that cable providers need to consider their position, with regard to the services they provide. “Last year, the cable industry hit a critical tipping point. In the second quarter of 2014, and for the first time, the number of cable broadband subscribers exceeded cable TV subscribers, and the trend has continued,” tells Wheeler, before advising “You are no longer the ‘cable’ industry. You are the leading association of leading broadband providers.”
FCC Chairman Tom Wheeler
On the topic of competition, Wheeler points out there is a lack of it in the marketplace, especially concerning high-speed connections. “A fully competitive marketplace would bring with it intense and constant pressure to continue to improve – just as it did in the days of cable-DSL competition,” muses the chairman.
The legal troubles suffered by municipal broadband projects trying to cover customers in underserved areas was also raised as part of the need for competition. “That is why we granted the preemption petitions filed by two communities that wished to expand their gigabit networks into surrounding areas, including where people had no broadband at all.” This has already borne fruit, with Comcast customers in Chattanooga being given access to a 2-gigabit service in the face of potential competition from the existing municipal fiber service and its possible expansion.
The unwillingness to overbuild networks is recognized by Wheeler, but he acknowledges the “only rationale for such an investment is to generate economic return.” Wheeler suggests the Open Internet Order was built to “put broadband providers in a situation where they could profit from the value of their investments free from any limiting rate regulation.”
“Your challenge will be to overcome the temptation to use your predominant position in broadband to protect your traditional cable business. The Internet will disrupt your existing business model. It does that to everyone.”
The reception to Wheeler’s speech by executives was less than enthusiastic. CNET reports CEO of european cable company Liberty Global Michael Fries was “baffled” by the remarks, as the consolidated unregulated industry allowed the broadband industry to grow in the first place. Fries went on to suggest the FCC was punishing cable companies for succeeding in the market, that the net neutrality rules were “terrible,” and that the company is “happy to be abroad.”
Cox Communications CEO Patrick Esser claimed the FCC’s actions are already costing the company money. “Pole attachment fees are going up; legal costs are going up, and our customer base pays for this. It’s not needed, and unnecessary.” Jim Dolan, Cablevision’s CEO, believes he sees a lot of competition in the market already, especially in New York City, though disputes his peer’s claims, suggesting “I don’t see any of these regulations affecting us at all. Competition is what regulates the market.”
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